About

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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Wednesday, July 02, 2008

Defensive Defense Stock: Saab

With rising energy prices threatening commercial aviation, aerospace and defense stocks haven't fared well in the global equities downturn. Year-to-date, according to an index tallied by FactSet Research Systems, the stocks of aerospace and defense companies worldwide have dropped 19% in dollar terms, versus an aggregate decline of 14% across all sectors globally.

At least one aerospace and defense stock, however, has bucked the year-to-date trend: Saab, the Swedish maker of military aircraft, aviation components and command and control systems. The share price for the Stockholm-headquartered company, not to be confused with the auto brand now owned by General Motors (nyse: GM - news - people ), is up 17% so far in 2008.

Even with the uptick, Saab still looks cheap. Its Stockholm-listed shares sell for just 10 times the average analyst estimate for 2009 earnings per share. Contrast that with equivalent multiples of 12 for Lockheed Martin (nyse: LMT - news - people ) and 13 for Raytheon (nyse: RTN - news - people ). Those interested in international investing should put Saab on their radar screen.

"In this turbulent time, we believe investors will appreciate this type of company more and more," says Mikael Laséen, a Stockholm-based analyst at Kaupthing Bank, speaking of Saab. "It is of course a political risk, but clearly you don't have to worry about the business cycle and consumer spending that much."

Full story at Forbes.com